Exhibit 99.1

News Release

For Immediate Release

VILLAGE BANK AND TRUST FINANCIAL CORP.

REPORTS 31% GROWTH IN EARNINGS FOR THE THIRD QUARTER OF 2020

Midlothian, Virginia, October 29, 2020. Village Bank and Trust Financial Corp. (the “Company”) (Nasdaq symbol: VBFC), parent company of Village Bank (the “Bank”), today reported unaudited results for the third quarter of 2020. Net income for the third quarter of 2020 was $2,269,000, or $1.55 per fully diluted share, compared to net income for the third quarter of 2019 of $1,727,000, or $1.19 per fully diluted share. For the nine-month period ended September 30, 2020, net income was $5,502,000, or $3.78 per fully diluted share, compared to net income for the nine-month period ended September 30, 2019 of $3,173,000, or $2.20 per fully diluted share.

Jay Hendricks, President and CEO, commented, “We produced an excellent third quarter, earning a return on average equity of 18.74% and earnings per share of $1.55 for the three months ended September 30, 2020. For the trailing twelve months ended September 30, 2020, we earned a return on average equity of 15.00% and earnings per share of $4.68. We are pleased by the outstanding contribution from our mortgage banking segment, which produced net income of $1,240,000 for Q3 2020 compared to $643,000 for Q3 2019.”

“The two headwinds we are fighting are compression in net interest margin due to the low rate environment and flat core loan growth, as commercial demand is somewhat muted and line utilization low. We were able to reverse the compression in the net interest margin during the quarter by managing our funding cost, and as a result our margin expanded by 19 basis points from Q2 2020. Our opportunity to invest $185 million in Paycheck Protection Program ("PPP") loans into our community resulted in substantial growth in deposits and more than 400 new business relationships which we are developing into future growth opportunities. As a result, our loan pipeline is strengthening heading into Q4 2020. We will continue to work hard to invest any excess liquidity into higher yielding assets and manage our funding cost and mix to support our net interest margin and return on equity.”

“We believe we are well positioned to weather the economic environment as uncertainty around the pandemic lingers. While asset quality remains sound, we have added to the loan loss reserve over the past three quarters due deterioration in the economic environment due to uncertainty around the pandemic. Our exposure levels to COVID-sensitive industries are manageable and our relationship managers are in regular contact with our borrowers, which will allow us to adjust course in a timely manner where it makes sense. The two sectors we continue to focus on are hotels and entertainment, neither of which will fully recover until restrictions are lifted and the economy begins to rebound. We anticipate that our loan deferrals, a majority of which were six months in term, will exit their deferral status starting in October and drop significantly during Q4 2020.”

“Previously announced leadership changes during Q3 were smooth and transparent as I assumed the President and Chief Executive Officer responsibilities from Bill Foster, the Company’s longstanding President and Chief Executive Officer, who retired on August 14. As part of that transition, Roy Barzel, Donnie Kaloski and Christy Quesenbery stepped seamlessly into their new responsibilities as Chief Credit Officer, Chief Risk Officer and EVP of Operations, respectively. Additionally, Mary Margaret Kastelberg joined the Boards of Directors of the Company and the Bank on October 1, 2020. Collectively, these leadership changes will be of great value to the Company and the Board, strengthening and supporting the Company as we continue to grow and achieve our strategic goals.”

Continued Response to COVID-19

As the circumstances with the COVID-19 pandemic began to unfold, the Company rapidly mobilized over 80% of non-branch team members to work-from-home, went to drive-thru only at our branches with lobby access by appointment, and actively worked with borrowers to defer loan payments to allow operations to return to some level of normalcy. With the continued uncertainty around the COVID-19 pandemic, we continue to take the necessary measures to protect the health and wellbeing of our employees and customers as well as working with our borrowers who continue to be impacted by the COVID-19 pandemic. We believe that we remain well positioned to weather the storm created by the COVID-19 pandemic and have built the balance sheet around a philosophy of prudent risk taking.

Operating Results

The following table presents quarterly results for the indicated periods (in thousands):

GAAP Operating Results by Segment

The following are variances of note in the Commercial Banking Segment for the quarter ended September 30, 2020:

Financial Highlights

Highlights for the third quarter of 2020 are as follows:

Loans and Asset Quality

The following table provides the composition of our loan portfolio at the dates indicated (in thousands):

Total loans decreased by $7,904,000, or 1.30%, from Q2 2020, and increased by $177,342,000, or 41.95%, from Q3 2019. The reduction in loan balances on a linked quarter basis was a combination of muted demand and low line utilization in the commercial and consumer portfolios, in addition to the normal amortization of the portfolio during the quarter. While loan demand was soft during Q3 2020 our pipeline has strengthened heading into Q4 2020.

PPP loans

The Bank had $185,137,000 in PPP loans as of September 30, 2020, which have provided essential funds to over 1,500 businesses and nonprofits and protected more than 20,000 jobs in our community. As of October 23, 2020, the Bank had submitted 183 applications to the SBA for forgiveness totaling $37,891,000 and received proceeds of $1,600,000 on 52 of those applications. Below is a breakdown by loan size including SBA fees expected to be earned as of quarter end (dollars in thousands):

The Bank expects the approval for forgiveness on PPP loans to be slow during Q4 2020, but expects it to pick up in the first quarter of 2021. This will result in net interest margin remaining compressed during Q4 2020 while the recognition of unamortized deferred fee income associated with the PPP loans will occur at a higher rate in the first half of 2021.

Asset quality

The Bank has been working with customers by granting loan payment deferrals to help them through the pandemic induced recession. While the Bank has not seen significant deterioration in its credit metrics, we believe that credit quality will deteriorate because of the current pandemic and have taken provisions for loan losses as a result. The Bank’s asset quality metrics continue to compare favorably to our peers as follows:

Asset Quality Metrics

⁽¹⁾ Source - SNL data for VA Banks <$1 Billion in assets as of June 30, 2020.

⁽²⁾ Annualized.

⁽³⁾ Nonperforming assets excluding performing troubled debt restructurings.    

Client Accommodations

The Bank continues to work with its customers impacted by the COVID-19 pandemic by allowing them to defer loan payments for up to six months to provide time for consumers and businesses to return to a level of normalcy. During Q3 2020, the balance of deferred loans increased slightly as the percentage of outstanding loans increased to 20.32% as of Q3 2020 compared to 19.80% as of Q2 2020, while the actual number of deferrals decreased to 5.85% as of Q3 2020 compared to 6.60% as of Q2 2020. A majority of our deferrals were for a period of six months and we anticipate a substantial portion of these loans will come off of deferral during the fourth quarter. To illustrate this point, as of October 23, 2020 the balance of deferred loans as a percentage outstanding loans has decreased to 16.65% compared to 20.32% as of September 30, 2020, and the number of deferrals has decreased to 4.01% compared to 5.85% as of September 30, 2020. We believe we are in a good position to continue to work with our customers that have been severely impacted by the COVID-19 pandemic and when necessary will move forward on longer term modifications, as permitted under the Coronavirus Aid, Relief, and Economic Security Act.

Below is a breakdown of the loan portfolio showing the percentage of loans deferred in each category at the dates indicated (dollars in thousands):

(1) Deferrals are expressed as a percentage of the outstanding balance (“Amount” column) and number of loans (“Number” column) per category.

(2) The table excludes PPP Loans of $185,137 as the inclusion of these loans dilutes the impact of the deferral program.

(3) The SBA is providing a financial reprieve to small business during the COVID-19 pandemic.  The SBA will automatically pay the principal, interest, and fees on current 7(a) loans for a period of six months. These loans have been excluded from the above metrics.

The Bank anticipates that borrowers in the hotel and entertainment industries will require additional loan deferrals. The hotel segment, which represents approximately 24% of total deferrals, has a weighted average loan to value of approximately 45%. The low loan to value on the hotel segment supports a lower breakeven point on occupancy which will allow these borrowers to return to amortizing terms. Below is a breakdown of the loan portfolio showing the percentage of loans deferred in select industry categories at the dates indicated (dollars in thousands):

(1) Deferrals are expressed as a percentage of the outstanding balance (“Amount” column) and number of loans (“Number” column) per category.

(2) The SBA is providing a financial reprieve to small business during the COVID-19 pandemic.  The SBA will automatically pay the principal, interest, and fees on current 7(a) loans for a period of six months. These loans have been excluded from the above metrics.

(3) Loans within this group include businesses such as grocery, convenience stores, drug stores, consumer durables, apparel, and personal services.

Deposits

The following table provides the composition of our deposits at the dates indicated (in thousands):

Total deposits decreased by $5,943,000, or 1.03%, from Q2 2020, and increased by $96,413,000, or 20.19%, from Q3 2019. Excluding the impact on wholesale deposits noted below, total deposits increased by $6,377,000, or 1.10%, from Q2 2020 and $108,733, or 22.77%, from Q3 2019. Variances of note are as follows:

About Village Bank and Trust Financial Corp.

Village Bank and Trust Financial Corp. was organized under the laws of the Commonwealth of Virginia as a bank holding company whose activities consist of investment in its wholly-owned subsidiary, Village Bank. Village Bank is a full-service Virginia-chartered community bank headquartered in Midlothian, Virginia with deposits insured by the Federal Deposit Insurance Corporation (“FDIC”).  The Bank has nine branch offices. Village Bank and its wholly-owned subsidiary, Village Bank Mortgage Corporation, offer a complete range of financial products and services, including commercial loans, consumer credit, mortgage lending, checking and savings accounts, certificates of deposit, and 24-hour banking.

Forward-Looking Statements

In addition to historical information, this press release may contain forward-looking statements. For this purpose, any statement, that is not a statement of historical fact may be deemed to be a forward-looking statement. These forward-looking statements may include statements regarding profitability, liquidity, allowance for loan losses, interest rate sensitivity, market risk, growth strategy and financial and other goals. Forward-looking statements often use words such as “believes,” “expects,” “plans,” “may,” “will,” “should,” “projects,” “contemplates,” “anticipates,” “forecasts,” “intends” or other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements.

There are many factors that could have a material adverse effect on the operations and future prospects of the Company including, but not limited to:

Additional factors, that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s reports (such as our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available on the SEC’s Web site at www.sec.gov.

For further information contact Donald M. Kaloski, Jr., Executive Vice President and CFO at 804-897-3900 or dkaloski@villagebank.com.

* Derived from audited consolidated financial statements.